December 19, 2012 / 1:21 PM / in 5 years

UK watchdog probes deal that created Bumi

LONDON (Reuters) - Britain’s corporate takeover regulator has restricted the voting power of coal miner Bumi’s Indonesian shareholders, potentially swinging the outcome in a shareholder battle over the future of the group.

The Takeover Panel, which oversees mergers and acquisitions, has also begun a probe into the details of the 2010 deal that created Bumi, one of the world’s largest thermal coal miners.

Specifically, it wants to know why the relationship between the Indonesian founding shareholders - now deemed to be acting together - was not disclosed at the time.

In a statement on Wednesday, the Panel said Indonesia’s influential Bakrie family, who created Bumi with financier Nat Rothschild, had acted “in concert” with another Indonesian shareholder, Rosan Roeslani.

The Indonesian partners’ voting power is restricted to 29.9 percent, the Panel said, although their economic interest in Bumi is almost double that.

The Bakries said in a statement they had now made a formal complaint against Rothschild, blaming him for the failure to disclose the relationship.

“Had the Takeover Panel been made adequately aware of the facts in November 2010 and ruled that there was a concert party, as it has now, we would certainly have sought a Rule 9 waiver,” the family’s Long Haul Holdings said in a statement.

“As it now stands, we are caught in an unjust situation where holders of some 57 percent of the equity in Bumi are currently (and collectively) restricted to only 29.9 percent of the votes.”

Relations between the Bakries and Rothschild soured not long after Bumi’s listing in 2011, with the two sides trading blows for months, while coal prices and shareholder battles dragged down the miner’s shares.

The conflict came to a head in September, with news of allegations of wrongdoing and a probe into operations including Bumi Resources, the jewel in the Bakrie crown.

Three weeks after that, the Bakries announced their plan to draw the line under their London venture and unwind Bumi, reacquiring the operating assets they had brought in.

Rothschild then tabled plans to counter that proposal. Under his proposal, new investors would inject cash and all current key Indonesian investors would be bought out, including founding shareholder Roeslani - who has now resigned from the board - and Bakrie partner Samin Tan.

In a separate statement, Bumi said it continued to work on a solution to separate the Bakrie family from the group and divest its minority stake in Bumi Resources, but had no plans to sell Berau, its other significant operating asset.

But it said only part of the Bakrie plan to pull operating assets out of Bumi had support, while the Nat Rothschild plan was “undeliverable”, as Indonesian shareholders had rejected plans to buy their shares.

“The board is unanimous in progressing a separation from the Bakrie Group and Bumi Resources,” said Julian Horn-Smith, Bumi’s senior independent non-executive director. “We will put this to shareholders as soon as possible in 2013 and outline a clear vision for the company going forward.”

Nat Rothschild said he would continue to work with the Indonesian shareholders to reach a “consensual solution”.

Reporting by Clara Ferreira-Marques, Editing by Rosalba O'Brien

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